Gold Price Outlook: Options Sentiment Extreme as Bears Target $4,800
Author: Matt Simpson, Market Analyst
Date: February 17, 2026
Market Overview
Gold prices have recently experienced a significant decline, dropping 5.6% as bearish sentiment grows among traders. The article discusses the implications of this downturn, particularly focusing on the potential target of $4,800 for gold prices, which could serve as a critical support level.
Recent Price Movements
Following a warning about the nature of gold's rally resembling a "dead cat bounce," the market has seen a shift in momentum favoring sellers. The author notes that two of the last three trading sessions have shown bearish engulfing candles, indicating a strong selling pressure.
Futures Positioning
The Commitment of Traders (COT) report indicates an increase in short positions against gold futures, particularly among large speculators and managed funds. Despite this, the overall short interest remains relatively low, suggesting that while bearish sentiment is rising, it may not yet indicate a major pullback.
Options Market Sentiment
Options traders are showing heightened caution, as evidenced by the negative shift in risk reversals. The 10-delta risk reversal has reached its most negative level since December 2024, indicating a stronger demand for puts over calls. This suggests that traders are either hedging against potential downside or anticipating a significant price drop.
Technical Analysis
The technical outlook for gold futures reveals two bearish engulfing candles, supporting the author's theory of a potential dead cat bounce. However, the presence of bullish divergences on the RSI indicates that there may be hesitation among sellers to push prices lower immediately.
Key technical levels to watch include:
- Support: $4,800
- Resistance: $5,000
- Highs: $5,140
The author suggests that while bears may attempt to drive prices towards $4,800, bulls could see this level as an opportunity to buy, potentially leading to a bounce back towards $5,000.
Conclusion
In summary, the outlook for gold remains uncertain as bearish sentiment grows, but key support levels and technical indicators suggest that a bounce could be possible. Traders should remain vigilant as the market navigates this choppy phase.